There is no such price, because there is no way to sustainably develop a product without subscriptions. You can't go to a local bakery and pay $24 for life to get fresh rolls every day.
Every one-time price is a gamble, where somebody is betting on something. It's a way to close your eyes and pretend ongoing costs do not exist.
This is clearly incorrect given that there are plenty of software developers who offer lifetime purchases. In fact there was a time that subscriptions for software were virtually unheard of.
On a lower level, all that matters is the numbers. If your average customer stays subscribed for 24 months, then charging a lifetime fee equal to 24 months is equivalent to a subscription model. At that point it's irrelevant what's "sustainable" since 24 months is the max you can expect to charge on average anyway.
If I buy version 2 then it's mine and I can continue to use it for as long as I want, if I'm happy with the feature set. I can ignore version 3 or choose to buy it. If I buy it then I now own two products instead of one. Sometimes the older version might even be better (e.g. features I like have been removed or made worse).
With a subscription model I'm forced to pay again and again even if I'm perfectly happy with version 2.
Given "there was a time that subscriptions for software were virtually unheard of", it's safe to assume we're talking about more than a couple of years ago. To talk as if most users always used to upgrade, suggests you might be young enough not to remember the software industry before a decade or two ago.
In general, users very much didn't upgrade. That's exactly why the industry forced subscriptions on us. They weren't getting income anymore, when the older version of their software did the job perfectly well.
I wasn't an automatic everybody upgraded on day one like subscriptions are, but it amounted to similar: regular upgrades over time.
With subscription,the only thing certain is that the seller wants to do as little as possible to keep taking my money. This tends to result on product updates that benefit them.
There's a big difference between software you buy, run on your computer, and don't expect to be constantly updated, vs. an online service that you expect to stay up and serve you new content forever. In the latter case, if a customer drops off after 24 months, that lowers your costs. You can't reasonably charge a user for the number of months they could potentially remain subscribed.
But I have run a bakery for 5 years, and you get better day by day, you introduce new techniques, find different flours, optimize bake times for fluffiness, crispiness, and taste. The croissants we make today are much better than what we made during our first month.
We improved our product just like how software improves, but we did it without a croissant subscription, but by selling its own version as its own thing day by day.
What software companies need to do is sell versions, where the life time of the version usefulness is actually limited. In the physical world, we have wear and tear, or in the case of croissants, decomposition or consumption which limit customers from using the same product forever.
Can the same not be found for many software products?
To use iOS as an example, the OPs app Castro charges for night mode, but night mode via OS controls didn’t always exist in iOS so a theoretical Castro v1 could have been released without before it, and v2 would include that new feature. Or when inevitably, v1 no longer works on new iOS versions, people would have to upgrade.
Some of the enterprise software I've worked on has an option that functions this way. You pay for a specific version which is supported for a few years. You can keep using it forever but if you want to keep getting security updates or live support then you'll have to buy a newer version that is still in its support window.
Having said that, it seems like most businesses seem to prefer subscriptions.
Such a price clearly exists -- in an extreme case you could charge 50x your annual subscription price and invest it with a 2% yield to get the equivalent of your subscription as interest. More realistically, if you are already considering taking on debt to grow your business it can make financial sense to offer lifetime licenses that are equivalent to several years' worth of subscription revenue to get an influx of up-front liquidity. Of course as your needs change so will your ratio of subscription-to-purchase price and this may result in a purchase price that is too high for your customers to consider, but the number always exists.
> Every one-time price is a gamble
True, but so are subscription prices! Either way, as the person who sets the prices, you are well-positioned to pick ones that are most likely to be successful.
If it’s sustainable at $1/month, and a customer is willing to prepay $1200 for a 100 year subscription, that sounds sustainable to me.
Even leaving it in a the right checking account, it’ll earn interest.
The gambling goes both ways. Your $1 subscription price is betting that you can convince each user to keep on paying that subscription forever, their $24 lifetime price is betting that customers are going to churn after a year on average.
Your gamble is perhaps slightly safer, in the sense that if subscriptions fall so too do the ongoing costs. But there is a floor to costs (i.e. you need to keep paying your team), so both approaches are pretty dependent on the sales funnel bringing in new subscribers
(1) Raise capital and spend a year developing a product
(2) Release the product, make a certain amount of money, then revenue dries up
(3) Pay yourself a bit and feed the rest of the money into develop version 2.0
(4) A year later it is struggle to sell version 2.0 because you're not just competing with applications from other people you are competing with your old 1.0, your most satisfied customers might be the least likely to upgrade
And that assumes development for 2.0 goes according to plan! As a software developer who gets a paycheck my life is easier working on a subscription based project my life is easier because management is not facing a financial crisis because a project is running a few months late.
As a customer though I often like paying ahead and I've been through a few cycles like this with Plex. Like I see the lifetime offering from Plex and I have the money now and it looks like a good deal... Then two years later they come up with something that really alienates me (that FAST service) and I hate being pushed into something I want nothing to deal with. So I go to Jellyfin and it is a godawful mess that I never get working quite right, just watching a movie with family and friends becomes an exercise in humiliation.
And I'm thinking... I don't have the option of exit [1] because I can't cancel my Plex pass! If on the other hand I was paying for a monthly subscription they are motivated to care what I think [2]
Now funny I had this summer when I was trying to gentle a stray cat [3] in a room in the other house and wound up watching a lot of Tubi, came to the conclusion FAST wasn't so bad, switched back to Plex, got a monthly subscription, and I am highly satisfied.
[1] https://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty_Model
[2] I hate to be this way but when I have trouble w/ amazon I write to jeff@amazon.com and point out that it makes no sense to screw me for $20 because I have a say in at least $2M NPV of AWS cloud spending, when you consider a Prime subscription and how much an ordinary person could buy from AMZN in a lifetime, AMZN has a tremendous amount to lose from "exit"
I agree that paying a one time price and expecting continuos updates and new features is not reasonable.
A great example for me is the Xodo app on Android. It's by far the best PDF editor that I've found on Android, particularly for annotating with a digital pen. Some features are locked. If I want to unlock them, it's $5 a month. I get nothing out of that which isn't already in the app. I'm happy to pay a one-off fee for the work the developers have done up to that point. I'm definitely not happy to add another $5 a month to my pile of subscriptions.
For me the boundary is this: (1) If I get something of value every month (e.g. use of a cloud server, or something which obviously needs regular updating like Netflix) -> subscription justified; (2) If I just want to use what I can already see in the app -> very unlikely I'll ever subscribe unless the product is absolutely essential to me and there are no competitors.
A good example of the latter is Skritter. I don't care about new functionality, but there literally isn't another app which can do what it does, so I pay the subscription.
It costs $99/year to keep your app on the Apple App Store. Stop paying and all apps are delisted.
It costs $5/month to maintain a business phone line (Apple needs a phone number)
It costs $10/month for a mail forwarding service (or else Apple will publish your home address)
It costs ~$100/year to maintain an LLC.
A developer must buy a new Mac every 10-12 years or so just to maintain basic OS support (we can call that ~$50 a year for a MacBook Neo, but if you want your code compile to not be painful you’ll probably grab a MacBook Pro).
Domain name? $15/year. Business email, $10/year.
There are plenty of businesses that have all that overhead and still sell things instead of subscriptions.
Flip this argument around: you go buy a rake at the hardware store. They tell you they need to charge $5 a month for as long as you want to use it since they have to pay for a phone and website, no apple fee, but their city business license is more than that, etc.
Precisely no one will take that deal. If the store wants to stay in business they must continue to sell more products. It’s not my responsibility to keep paying them for a product so they can have a phone line.
If you are selling an app that has a service backing it or are providing support and updates, fine. Try to sell it as a subscription. If you are selling an app that runs entirely on my device? Version it. If you want me to pay for your overhead of continued development, create a new version that has something I would want to pay for.
None of that applies to Android, and it only applies to Apple because we have such abysmal regulation in the modern era, where you apparently aren't allowed to regulate business that happens with a computer for some reason.
As far as “none of this applies to Android,” you’re right, but the App Store is where 70% of mobile revenue is spent, even though Apple has less than 20% global marketshare. [1]
Yes. On the exact major OS version you signed up on.
- Subscriptions are marketed as being a lot more than just bugfixes - new features being the big one. But there's usually no cheaper "bugfix-only" subscription, which means that someone who doesn't care about new features has to pay for them anyway.
- To be honest - yes, I do expect bugfixes for free if I've paid to buy the product. After all, a bug is a defect, and products are usually sold with the expectation that they will be fit for purpose. That's the principle which applies to physical consumer products, so why should it be any different for software? If I bought software that calculates my taxes for me, and it turns out a bug means that it applies the wrong tax rules, then I haven't got what I paid for. Why am I expected to pay every month just to make my software do what it was supposed to do in the first place?
- The developer is still incentivised to fix bugs in order to attract new purchasers.
- Subscriptions aren't a magic solution financially anyway, because there's an average limit to how long a customer stays subscribed for.
The only reason I routinely need to update most software, is that Apple/Google keep changing device screen resolutions/cutouts and they keep killing off old APIs
So if you’re a bakery and a customer offers $9000+ for a fresh roll every day forever, you should almost certainly take them up on that offer. A smart baker could probably get that number sub-$5000, but you’ll always come out okay around 25x the yearly cost (in this case, $365).
Similarly, if the amortized yearly cost of a customer is $12 (ie, $1 per month), then a $300 forever price is financially indistinguishable from a permanent subscription. (Actually, better: time value of money, they can’t cancel the annuity you buy, etc.)
So there always is a price where that is financially viable.
That margin is called profit and has been the standard way every single business ever has managed ongoing expenses outside of per-transaction costs forever.
Despite this "Gamble", businesses continue to function every day. Some fail, but that is a purposely designed part of the market. If you cannot forecast your costs and revenue, you are supposed to go out of business.
It's funny that only in the world of Tech, the supposedly magical world where you can do so much with so little and one individual can "Build" something used by millions, that suddenly customers have to bear the burden of the business's inability to forecast costs and profit.
What, do you also expect me to tip you when I download?
Keep in mind that the vast vast majority of software subscriptions do not let you continue using the product you have paid for when your subscription lapses, even when the product gets no more support!